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NH House panel rejects beer tax increase

CONCORD - A proposed 33 percent increase in the state beer tax was left at death's door Tuesday, as the House Ways and Means Committee voted to recommend killing the bill.

By a vote of 14-2, the influential tax-writing panel declared the proposed increase to be "inexpedient to legislate."

Chairman Barbara Almy, D-Lebanon, said members were concerned about the financial impact of a beer tax that is "considerably higher" than most nearby states.

Supporters of the tax now face a tough task. Passing a beer tax requires rounding up enough votes to overturn the Ways and Means Committee recommendation, and a promised veto by Gov. Maggie Hassan means a two-thirds majority would ultimately be required in each branch for the beer tax hike to make it into law.

The proposed increase of 10 cents per gallon, from 30 to 40 cents, would be paid at the wholesale level. Industry representatives argued at a hearing earlier this month that the increase would trickle down to the consumer level, damaging the state's strong beer sales record.

The tax bill was filed by Rep. Charles Weed, D-Keene, who wanted to use proceeds of the tax increase to fund substance abuse prevention efforts.

During hearings on the bill, opponents argued it would weaken the state's competitive standing in the region on beer sales.

"It would have put us as the highest beer tax in New England," said Ways and Means Vice Chair Patricia Lovejoy, D-Stratham.

The beer tax in neighboring Massachusetts, set at $3.30 per barrel, is about 11 cents per gallon and has been unchanged for 33 years. In Vermont, the 26.5 cents per gallon tax has not been changed since 1981. Only Maine among nearby states has a higher beer tax, at 35 cents per gallon; an effort to raise the Maine tax was was rejected by voters in 2008.

A short-lived extension of the 6.25 percent Massachusetts sales tax to alcoholic beverages was rolled back in a 2010 referendum.

Competitive pricing for beer in New Hampshire is credited with spurring strong sales in the state compared to stagnant performance nationwide.

Weed and other supporters said that alcoholic beverage sales are a logical source of funds for substance abuse programs, which have suffered in recent years as lawmakers divert liquor store profits from a substance abuse fund to other state purposes.

The two first-year lawmakers who voted to support the beer tax increase in committee, Democrats Harry Young and Richard Ames, represent different Jaffrey districts and each spent long careers working in human services. Young spent decades as a hospital administrator, while Ames was general counsel to several human service agencies in Massachusetts.

New Hampshire retailers sell more beer per capita than any other state in the country.

According to the Beer Institute, about 43 gallons per person of legal drinking age is sold in the state compared to a national figure of about 28 gallons.